Square Goes Public
Square, the San Francisco-based mobile payments company, is poised to go public. Around the time of the Twitter (TWTR) IPO, details were leaked that Square was considering going public in 2014. The company could be worth as much as $4.5 billion, after raising funds last year at a valuation of $3.25 billion.
The company already has Larry Summers on its board, and recently added former Goldman Sachs (GS) CFO David Viniar to its board, further fueling speculation that the company is readying itself for the public markets.
The Jack Dorsey-led company is not profitable, and gives a good chunk of its revenue to MasterCard (MA) and Visa (V), which is an investor in Square. As of May, Square was processing $15 billion in transactions on an annualized basis, but that number could be higher now. Based on a 2.75% flat fee, that would put Square's annual revenues at around $550 million, but given the nature of its agreement with MasterCard and Visa, that number is probably closer to $150 million.
Dorsey has previously said he has plans for the company to become profitable by 2015, but did not say whether those plans include additional capital raises to achieve that goal.
If I were a betting man, I'd put the likelihood of a Square initial public offering in 2014 at better than 60% odds, given the nature of the equity markets, and the need for expansion into the hot mobile payments space. Though I was able to predict with some reasonable accuracy of when Twitter would file its documents (I said November, the company did it in September and went public in November), I'm much less certain about this timing. Best guess? The company files its documents in August, and goes public around October.